The seven criminal charges that Sam Bankman-Fried, the former CEO of cryptocurrency exchange FTX, was found guilty of represent a stunning fall from grace for a once-famous “math nerd” in the banking industry.
Bankman-convicted Fried on accusations of money laundering, wire fraud, and securities fraud, she now faces the possibility of spending decades behind bars. Before rendering its decision, the jury thought over the case for several hours.
Bankman-Fried is likely to appeal the decision.
“We honor the jury’s verdict. However, we are rather dissatisfied with the outcome. In a statement, Bankman Fried’s attorney, Mark Cohen, stated, “Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him.”
Prosecutors attempted to establish throughout a trial that lasted over four weeks that Bankman-Fried was a criminal mastermind who planned a significant financial scam.
Prosecutors described how Bankman-Fried and several of his senior lieutenants covertly transferred billions of dollars worth of customer assets from FTX to Alameda Research, a private trading company he also owned, in a regularly filled courtroom.
According to U.S. officials, the former billionaire used FTX client funds to purchase expensive real estate for friends and family, make dangerous investments, and donate to political causes, treating Alameda like his own personal piggy bank.
“While the cryptocurrency industry may be new and players like Sam Bankman-Fried may be new, this kind of corruption is as old as time,” stated Damian Williams, U.S. attorney for the Southern District of New York, in a statement. “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history – a multibillion-dollar scheme designed to make him the King of Crypto.”
“This case has always been about lying, cheating, and stealing, and we have no patience for it,” he added.
From a penthouse in The Bahamas to a prison
The conviction marks a sharp reversal of fortune for a now 31-year-old M.I.T. graduate who just last year was living large in a $35 million penthouse with some of his co-workers, as he ran a crypto empire that was estimated to be worth tens of billions of dollars during its heyday.
As FTX grew, Sam Bankman-Fried became a celebrity in his own right at a time when the popularity of cryptocurrencies surged. There was a wave of investments from amateur traders and established Wall Street firms alike, and Bankman-Fried capitalized on the craze.
Easily identifiable by his unkempt hair and his go-to outfit of shorts and a T-shirt, he was praised at conventions and socialized with A-listers like the late quarterback Tom Brady.
However, once a story raised questions about Alameda’s financial stability, his firms began to fail. This led to alarmed FTX clients taking their money out of the bank, essentially resulting in a cryptocurrency run.
On Nov. 11, FTX and Alameda Research filed for bankruptcy. One month later, Sam Bankman-Fried was arrested in The Bahamas.
Bankman-Fried’s friends turned against him
Bankman-Fried’s former executives began to turn against him one by one. Among them was Caroline Ellison, who had formerly headed Alameda and was also his intermittent lover.
Along with Sam Bankman-Fried, she co-founded Alameda Research and FTX. Gary Wang, one of her coworkers, also entered a guilty plea and consented to work with federal prosecutors.
Their testimony proved damning during the trial.
They testified in court that they were told by Sam Bankman-Fried to commit crimes, and their testimony was particularly strong because the collaborating witnesses were not only Bankman-Fried’s coworkers but also some of his closest friends.
Wang, for example, was Bankman-Fried’s friend at math camp and his roommate at M.I.T.
Sam Bankman-Fried‘s Hail Mary
When Bankman-Fried testified in his own defense—something that most white-collar criminal defendants don’t do—it was arguably the most dramatic moment of the trial.
He was so disappointed with the outcome of the trial that he chose to stage a Hail Mary in the hopes of avoiding going to jail.
For someone with a reputation for taking risks, it was a risky bet. But it was ineffective.
Bankman-Fried collapsed before Danielle Sassoon’s scathing cross-examination, a tough prosecutor who worked as Antonin Scalia’s law clerk.
She made excellent use of Sam Bankman-Fried’s own comments against him, and she had many to pick from.
Bankman-Fried represented FTX as its public face for many years, actively pursuing journalists, sending out tweets, and giving speeches at conferences.
Even after being charged with a crime and put under house arrest at his parents’ Northern California home, he persisted in pursuing attention.
Judge Lewis Kaplan was so incensed with Sam Bankman-Bried for talking to and disclosing confidential information about the case to journalists that he revoked Bankman-Bried’s bail and put him in jail.
Bankman-Fried’s defense crumbles
Using Bankman-Fried’s remarks, Sassoon demonstrated the glaring discrepancy between Bankman-Fried’s public persona and his private behavior.
For instance, even as prosecutors claimed he knew this couldn’t have been further from the truth, Bankman-Fried assured his hundreds of thousands of followers on X, the former Twitter, that FTX was in good shape when the company was on the verge of collapse.
“FTX is fine,” he tweeted on Nov. 7, just days before the company imploded.
Sam Bankman-defense Fried’s, which portrayed him as a “math nerd” who got into over his head rather than a “movie villain,” was in conflict with the picture the prosecution presented.
The defense also attempted to contend that Bankman-Fried lacked experience and was unfit to oversee executives at FTX and Alameda Research or to monitor the goings-on at two multibillion-dollar corporations.
Sam Bankman-Fried made mistakes, but his attorney, Mark Cohen, maintained in his closing statement that he always behaved in good faith and never planned to conduct any crimes.
Cohen stated, “People make mistakes in the real world.” They are hesitant. They do not account for unforeseen events. They make both wise and foolish business judgments, as well as errors that they later wish they had avoided.”
The jury decided to support the prosecution after several hours of deliberation.
Thus, Sam Bankman-Fried might potentially spend the remainder of his life behind bars while he is detained in a federal jail located in Brooklyn.
Sam Bankman-Fried is a prominent figure in the cryptocurrency and blockchain space. He is known for co-founding FTX, a popular cryptocurrency exchange, and for his active involvement in the crypto industry.
FTX Exchange was founded in 2017 by Sam Bankman-Fried and Gary Wang. Since then, it has grown to become one of the leading cryptocurrency exchanges in the world.
Sam Bankman-Fried graduated from the Massachusetts Institute of Technology (MIT) with a degree in physics. He was a professional trader before entering the cryptocurrency industry.
Sam Bankman-Fried is known for his involvement in the cryptocurrency derivatives market and for founding FTX, which has gained a reputation for its innovative products and features.
Sam Bankman-Fried is known for his philanthropic efforts in donating significant amounts to effective altruistic causes. He is also an advocate for cryptocurrency regulation and transparency in the industry.
As of my last knowledge update in January 2022, Sam Bankman-Fried was considered a billionaire due to his significant holdings and involvement in the cryptocurrency industry. However, his net worth may have changed since then, so it’s advisable to check the latest information for an accurate assessment.